Monday, December 22, 2008

India Exploration Geologists Fleeing Govt. Petroleum Companies

Geology and livelihoods - 3

I got my bachelor's degree in geology from Fergusson College, Pune. Last week we celebrated the centenary of the department. That is an awfully long tradition of geology in this part of the country. As is inevitable I bumped into colleagues, contemporaries, seniors I had not seen for more than a decade. The department had gone to heroic lengths to get in touch with old students. And I mean really old. There was a sprightly old gentlemen who graduated in 1938 and who soon became one of the star attractions of the afternoon!

I thought it would be fun to compare his lab journal and notes with today's syllabus. What vast differences and maybe some similarities? Come to think of it we still don't teach plate tectonics in second year! :-)

Among the many talks, the one that caught my eye and made me think a bit was a talk by a friend of mine who now works as a senior exploration geologist with a private energy company. He mentioned that around 200 middle and senior exploration geologists have over the last 5 years left government owned oil companies and joined the private energy sector.

Now that is a massive transfer of human capital. I won't say loss of capital since the vast majority of those who left are still working within the Indian oil and gas scenario. Still the government companies feel a little aggrieved. They invested in these people and one fine day all that knowledge base is gone.

I did get the impression talking to friends who have followed this path lately, that financial incentives although certainly important were only part of the motivation. Many, especially those with a Ph.D feel that the government companies don't make full use of their expertise. My friend who is a micro-paleontologist and sedimentologist in a decade and half career with the government didn't always work in his field of specialization.

That is a waste of expertise. Private companies though can't and won't waste. Specialization is rewarded. So while I appreciate the difficulty government companies are facing due to these departures, I see this trend as theoretically a more efficient allocation of human resources.

One practical problem with this theory of efficient resource allocation is that private oil companies hold rights to a very small portion of India's old and new oil producing basins. Private oil companies were only allowed 100% equity in oil and natural gas projects since 2000 under the New Exploration License Policy. So government owned oil companies have ownership of almost all the mature oil fields. Since 2000 nearly 160 new exploration blocks were licensed. Government companies like ONGC along with other national oil companies have done very well in the bidding process winning maybe more than half of those blocks. Not a single international oil major even entered the bidding process.

Besides infrastructure expansion capability, this could turn out to be another limiting factor for India's future oil and natural gas production capacity. India currently imports more than 60% of its oil needs and as its older fields decline, is relying on new finds on the west and east coast offshore basins to boost its domestic oil and natural gas production and relieve it's import requirements. The east coast deep water basins are thought to hold close to 40 trillion cubic feet of natural gas. If true, in terms of energy equivalence this is like doubling India's proved oil reserves as of January 2007 of around 5.6 billion barrels.

The country needs geologic expertise especially in the newer deep water blocks. The government holds rights to a lot of these, but many of their experienced geologists are leaving.

See: Geology and livelihoods

1 comment:

  1. Well, my father was in the ONGC and in the last couple of years a lot of people in and around his team (which was technical) have left for the private cos. It is sad to see how these institutions cannot retain talent that it has built up over these years.

    They need to start thinking like the private cos and get their pants up.